U.S. Securities and Exchange Commission chairman Christopher Cox announced that the agency still favours allowing firms to use a variety of different methods of valuing employee stock options in their financial statements.

The comment came following the issuance of informal staff progress reports on the SEC’s ongoing evaluation of proposals to value employee stock options for financial reporting purposes.

Cox noted that it has been nine months since the Financial Accounting Standards Board issued its statement requiring the expensing of stock options, and almost six months since the SEC published a staff accounting bulletin regarding the implementation of the FASB standard. “Today, the commission’s staff are issuing informal commentary that assesses progress toward using market approaches to valuation of employee stock options. This commentary is intended to stimulate discussion and promote further efforts at the development of market instruments to value employee stock options,” he said.

He noted that many valuation approaches are being studied, and suggested that it will be rare when there is only one acceptable choice in estimating the fair value of employee stock options. “The commission’s approach has been, and remains, the encouragement of robust efforts in the private sector to design market instruments that have the potential to accurately measure the cost of employee stock option grants to the issuer,” he said.

“Over time, as issuers and accountants gain more experience in valuing employee stock options for financial reporting purposes, particular approaches may begin to emerge as best practices, and the range of potential methodologies will likely narrow. For now, however, it is not our intention to narrow the field and to limit experimentation, but rather to welcome it,” Cox suggested.

“We remain committed to the promotion of competition between different approaches. Ideally, that competition will also lead to further innovation in models used to value employee stock options,” he added.